Detailed Guide to Pradhan Mantri Awas Yojana (PMAY) scheme

Have you dreamed of your own house? Are you planning to buy your first house?

But, buying own house is not possible without taking loans and paying heavy EMI’s. However, now it is quite possible for new home buyers with subsidized loan given under “Pradhan Mantri Awas Yojana” which is an initiative by government under “Affordable Housing for all by 2022” in the country. It is also referred as credit linked subsidy.

With this scheme you can buy a new home/flat, construct a house or you can enhance your home by adding room, toilet or kitchen. Till date 15 Lakhs house has been constructed and 75 Lakhs loans has been sectioned under this scheme. The overall structure of the scheme is not easy to understand. So, let’s understand all the elements in simple points.

1. Who can opt for PMAY?

  • A First time home buyer, who does not have any home on his name or in name of any family member.
  • He or his family should not have availed any central assistance under any housing scheme of government.
  • An individual who has a pucca house and wants to enhance it by adding toilet, room or kitchen etc.

Family includes Self, Spouse and Children. But, if daughter/son is earning adults(irrespective of marital status), than he/she will be treated as a separate entity. So, this means even if parents and earning children are staying in a house owned by parents, they can individually opt for PMAY provided he/she doesn’t have nay house own name.

2. What will be the eligibility and subsidy?

Government has categorized different groups taking their annual earning in to consideration, which will be helpful in evaluating eligibility and amount of subsidy. Following table shows different groups and other criteria.

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Groups Annual Income Maximum loan amount for subsidy Interest rate for subsidy Maximum Subsidy Amount Allowed Area
Economically Weaker   Section (EWS) Upto Rs. 3 Lakhs Upto Rs. 6 Lakhs 6.50% Rs. 2.60 Lakhs 30 sq. mt. (322.917 sq. ft.)
Low Income Group (LIG) Rs. 3-6 Lakhs Upto Rs. 6 Lakhs 6.50% Rs. 2.60 Lakhs 60 sq. mt. (645.834 sq. ft.)
Middle Income   Group-1 (MIG 1) Rs. 6-12 Lakhs Upto Rs. 9 Lakhs 4% Rs. 2.35 Lakhs 160 sq. mt. (1722 sq. ft.)
Middle Income   Group-2 (MIG 2) Rs. 12-18 Lakhs Upto Rs. 12 Lakhs 3% Rs. 2.30 Lakhs 200 sq. mt. (2152.78 sq. ft.)


*1 sq mt = 10.7639 sq ft

*Maximum term allowed for subsidy is 20 years for all the 4 groups. That means subsidy will be calculated for the term of loan or 20 years whichever is less.

*Interest portion of EMI at subsidized rate will be discounted at 9% to get the net present value of subsidy.

Let’s understand the above table through case studies-

1. If your annual earning is Rs. 3,00,000 and you have taken home loan of Rs. 10 Lakhs for 15 years at 8.50% interest p.a. So, what will be the subsidy amount?

As your earning is Rs. 3 Lakhs, you fall in EWS group. So, You will get 6.5% of interest subsidy on Rs. 6 Lakhs of loan for term of 15 years provided the house area is not exceeding limit of carpet area of 30 sq. mt. The amount of subsidy will be Rs. 2.09 Lakhs (Back calculation – considering EMI at 6.5% on loan amount of Rs. 6 Lakhs for 15 years and interest portion out of it discounted at 9% to get NPV).

2. If your annual earning is Rs.8,00,000 and you have taken home loan of Rs. 20 Lakhs for 25 years at 8.50% interest p.a. So, what will be the subsidy amount?

As your earning is Rs. 8 Lakhs, you fall in EWS group. So, You will get 4% of interest subsidy on Rs.9 Lakhs of loan for term of 20 years and not 25 years (as maximum term is 20 years)  provided the house area is not exceeding limit of carpet area of 160 sq. mt. The amount of subsidy will be Rs. 2.35 Lakhs (Back calculation – considering EMI at 4% on loan amount of Rs. 9 Lakhs for 20 years and interest portion out of it discounted at 9% to get NPV).

You can refer the video given below to understand PMAY –

3. Will subsidy be given for existing home loan?

The subsidy under this scheme can be availed on existing home loans sanctioned on or after 17/06/2015 for EWC section and LIG section. And for MIG 1 & MIG 2 subsidy can be availed if loan is section on or after 01/01/2017.

So, if you have an on going home loan which you received in 2017. In that case also you can apply under PMAY to avail subsidy. And the amount of subsidy will be calculated as per your current income earning section i.e. if now you are earning 10 Lakhs then you will fall under MIG 1 and original term of loan will be taken in to consideration.

4. How to enroll to avail benefits under this scheme ?

You can enroll for this scheme online or offline. In offline mode you need to visit the bank from where you want to apply loan or where your home loan is existing, get the form of PMAY and fill & submit the same.

For the online mode you need to follow following steps –

Step 1#: Go to the website of PMAY. Below given page will appear –

proceedure for enrolling under PMAY scheme

Step 2#: Click the citizen assessment drop-down and select the benefits under three components as shown below.

pradhan mantri awas yojana citizen assessment


Step 3#: Once you click the benefit under other 3 components, the below window appears. Now enter your Aadhaar details and or virtual ID and click on check.

pradhan mantri awas yojana check aadhar existence

Step 4#: Once you check your Aadhaar card existence, the below page will appear. Fill the form with required details. To give you a glimpse, screenshot is attached.

information of beneficiary being covered under PMAY slum development

Step 5# Attach required documents

documents required for loan under PMAY scheme

Once your application is submitted, after due examination if you are a eligible beneficiary under PMAY, you will be added to the list of beneficiary. You can find it on the website of PMAY in beneficiary tab. If your name comes in beneficiary list then you need to inform about the same to the bank from where you have granted loan.

5. How will I receive the interest subsidy benefit under PMAY Scheme?

The Bank (where you have applied for a loan under this scheme) will claim subsidy benefit for eligible borrowers from National Housing Bank (NHB). The NHB will conduct due diligence to exclude claims where the customer has submitted multiple requests. Then all the eligible borrowers will receive the subsidy amount to the Bank.

Once the Bank receives the interest subsidy, it will be credited upfront to the loan account. Therefore it is called credit linked subsidy. For example, If the you avails a loan for Rs. 8 lakh and the subsidy received is Rs. 2, 20,000. The subsidy amount (Rs. 2, 20,000) would be reduced upfront from the loan amount (i.e., the loan would reduce to Rs. 5, 80,000) and then you would pay EMIs on the reduced amount of Rs. 5, 80,000.

And also in case your EMI is on going and you are eligible for subsidy. Then you may be offered by your bank for using subsidy as credit so your EMI will be reduced or for reducing the term of loan. I would suggest to go with reducing term of loan.


Is woman co-ownership is mandatory for availing subsidy?

Yes, for EWS and LIG class of subsidy woman co-ownership is mandatory whether it be the case of new house or addition of kitchen/toilets etc. And for MIG 1 & MIG 2 it is not compulsory to have a woman co-owner to the house property.

Can I do renovation/up-gradation in an existing house with the help of this scheme? 

Yes, you can if you fall under MIG 1 or MIG 2 section. You can not avail subsidy for renovation if you fall under EWS or LIG.

Is it mandatory to fetch Adhaar card details for all the members of the beneficiary family?

Yes, for processing the subsidy under PMAY for MIG 1 and MIG 2, it is mandatory to furnish the Aadhaar card details of all the family members.

I hope this article has helped you in understanding that how one can avail benefits under PMAY Scheme. Please feel free to ask your doubts or queries the in comment section.

Is it possible to take loan against Fixed Deposit?

FD is one of the most popular investment option in India due to its numerous advantages like safety, fixed interest earning and easy to understand product. And now you can easily get a loan against your FD even if you don’t have a credit score or meet any income earning eligibility criteria to apply for a loan.

So, One of the main advantage of holding a Fixed Deposit (FD) is that you can secure a loan amount below your FD amount, without actually breaking it!

Can I get loan against my fixed deposits?

Eligibility criteria, documents required and how to apply?

In order to apply for Loan against FD, you will have to approach your bank manager, fill the desired form and submit the important documents. Many banks such as PNB, HDFC etc… are offering online facility for loan against FD.

Eligibility criteria for taking the loan against FD

  • You need to have a year old active fixed deposit with the bank.
  • Applicant should be at least 21 years old
  • Applicant has to be resident citizen of India
  • Individual, sole proprietorship, societies, HUFs etc are eligible.

Documents required for taking the loan against FD

  1. Application form
  2. Fixed Deposit receipts
  3. A cancelled cheque might be required if the loan is being taken from financial institutions other than banks
  4. Duly signed agreement letter
  5. Passport size photographs
  6. Valid photo identity proof

Let us see a video to understand it more clearly –

Interests charged on the loan amount

The interest rates charged for FD loans as compared to traditional loan interest rates are very less. It is generally around 2% to 3% more than the FD interest rate.

Example – Ram is having a FD worth Rs 10,00000. He is earning an interest rate of 6.5% on his FD; if he applies for loan against FD then here he will be charged an interest rate of 8% to 8.5% on the loan. The interest charged here is much less than the average loan interest rate that usually ranges from 9% to 15% (varies from banks to banks).

Below is an indicative chart of different banks with interest rates on overdraft of FD

what are the interest rates of different banks on loan against FD?

Is pre-payment of loan against FD allowed? If yes, how much is the penalty charged?

Yes, pre-payment of loan is allowed with no penalty charges. If you are thinking of taking loan against your FD, and you know that after few days or few months you can make pre-payment of the existing loan then you will be at profit because pre-payment is also allowed that too with no penalty charges.

How long can be the loan tenure?

The loan tenure against fixed deposits depends on the tenure of the fixed deposit. The tenure of loan will not be more than the term of fixed deposit. In most of the cases tenure of loan is 3 years.

Example – Sham wants to avail a loan on his fixed deposit (whose maturity is in 5 years). He can avail the loan only after completion of one year of FD. If he takes loan then he will have to repay the loan within the next 4 years, before the maturity of the fixed deposits.

Loan against FD vs Breaking the FD

The natural question here one will ask is, why not break the FD itself and use the money? Why one should apply for the loan??? Let us see the difference between the both and then one can take the decision.

Difference Between Loan against FD and Breaking of FD

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Features Loan Against FD Breaking of FD
Ease of getting money Money will be received after procedure of loan sanction is over  Money is received immediately either in cash or Bank
Interest Rate Interest on loan amount has to be paid No need to pay interest
Sanctioned amount Limitation on amount received (Up to 90% of FD) You get the entire amount you invested so far


You can see in the table above, all points favour breaking of Fixed deposits, but one reason why you can think of taking the loan against FD is-

The human tendency, that you repay the loan in EMI form easily rather than again creating the FD. If you break the FD and use the money, there is no compulsion for you to again save money and create the FD and it might happen that you will not have wealth at later point.

However, if you take a loan against FD, then the FD exists and you will look at the loan repayment as your primary objective and forced to pay back the money.

One more reason of taking loan against FD is, IF you are asked for a financial help by some relative or friend and if you choose to get loan for them against the FD. Then, they will be more serious in repayment of EMI because then they will be knowing it well that you have facilitate them a loan which has to be repaid on time. So, it will become obligatory for them to repay.

And in the same condition if you break FD and give the money as loan, its a transaction between you and your friend/relative and there is a tendency of all human beings to not return the money on time and become very casual about it, if it is not legal obligation over some one.

That was all about the loan against FD .. Do feel free to ask any doubts in the comment section.

How to do KYC for Mutual Funds? Its quick and easy!

Are you a new investor in mutual funds ? If yes, then you might be having these questions in mind.

  • What is KYC ?
  • What do I need to do to register my KYC?
  • Whom should I approach?
  • Do I need to do my KYC every time before investing into mutual funds?

So, in this article you will get the answer of all such queries.



What is KYC ?

KYC i.e. Know Your Client is a process required by RBI norms which needs to be completed before starting any investments. It is used as an eligibility test of an investor to prevent illegal activities like money laundering. So, if you are planning to start investing in mutual funds, you need to register your KYC first.

Do I need to do my KYC every time before investing into mutual funds ?

No, as KYC is one time exercise (central process) needs to be done before investing. Once your KYC is registered you need not to undergo same process again while investing with different mutual fund houses.

How can I register my KYC ?

For KYC registration, KYC form has to be filled with all the details and needs to be submitted along with self attested copies of required documents (as discussed below).

Also note, that if you want to invest in mutual funds (Resident or NRI), Click here to know about Jagoinvestor mutual fund services. We also help you in getting your KYC done

From where can I get the KYC form ?

You get get the KYC form via 3 sources:

  1. For this you need to visit the website of CAMS KRA, Karvy or other registrars.
  2. Or you can also visit the website of the fund house where you want to start your investments.
  3. Or you can reach an Independent Financial Advisor.

What documents are required to be attached with KYC form ?

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For Resident Indian following documents are required :

  1. Copy of photo ID proof such as Aadhaar, Passport, Voter ID, or Driving license etc.
  2. Copy of address Proof eg. Electricity bill, Aadhaar etc.
  3. Copy of PAN card
  4. Two passport size photos
For Non-Resident Individuals(NRIs) following documents are required :

  1. Copy of Passport is compulsory
  2. Copy of Overseas Address Proof
  3. Copy of Indian PAN card
  4. Two passport size photos
  5. Copy of other national or Citizenship Identification Number or Taxpayer Identification Number


Important Points:

  1. POI card needed for POI
  2. In case your overseas address is not in English, you need to get it translated by a translator in your city and get their stamp
  3. In case you do not want to travel to India just for making investments, you can always give POA to someone trusted who can do the process for you.
  4. In person verification is mandatory for true identity verification. So, Fund houses or registrars does IPV via video calls.

Where can I check my KYC status?

Once your KYC form along with required documents is submitted to the registrars(CAMS, Karvy, Sundaram etc.) It will take 4 to 5 days in registration. Once it is registered you can start investing into mutual funds. You will get the  alert about the registration via mail or SMS. However, if you want you can check status of your KYC by entering your PAN in either of the links below:

You can also refer these links for downloading KYC application form.

Conclusion :

For KYC you need not to go anywhere, it can be done from your home. So, if you are planning to start investing in Mutual Funds, KYC is the first step to it. And if you are having any trouble in KYC or while investing, do let us know in the comment section.